(Reuters) -U.S. job growth accelerated in September and the unemployment rate fell to 4.1% from 4.2% in August, further increasing the need for the Federal Reserve to make big interest rate cuts at its remaining two meetings this year was reduced. < > Jobs rose by 254,000 last month, following an increase of 159,000 in August, the Labor Department said Friday. Economists polled by Reuters had forecast wages would rise by 140,000 jobs, after rising by a previously reported 142,000 in August. The initial August payroll has typically been revised higher over the past decade. MARKET REACTION: STOCKS: S&P 500 E-minis extended 0.73% higher BONDS: The yield on US 10-year bonds rose to 3.934%, the yield on two-year bonds rose to 3.8469% FOREX: The dollar index rose to 0.6 % higher
FED FUNDS FUTURES: The odds of a 25 basis point cut at the Fed’s November meeting rose to 93% from about 71% before the data, according to LSEG calculations. NOTES: WASIF LATIF, PRESIDENT AND CHIEF INVESTMENT OFFICER, SARMAYA PARTNERS, PRINCETON, NEW JERSEY
“This is definitely much stronger than expected. I think it surprises quite a few people. It means that the 50 basis point rate cut that we already got – which was good for psychology and for overall sentiment; and the next rate cut may not have to be that big. The first reactions are that interest rates are going up and that the market is taking some of the rate or number of interest rate cuts off the table or pushing them further out. I think on the equity side, the stock markets are still buoyant. It seems like they like this. So there can be good news, good news.”
PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK
“They were much stronger than expected and it obviously allays fears that the economy will soon move into negative growth… it actually tells us that economic activity is likely to remain at a solid pace in the fourth quarter. The fact that “A 13 cent increase in hourly wages is good news for the Fed. It’s an explosive report, so it’s a good surprise, but I also think this could slow the pace of rate cuts now.”
GENE GOLDMAN, CHIEF INVESTMENT OFFICER, CETERA INVESTMENT MANAGEMENT, EL SEGUNDO, CA
“The number was phenomenal. It was well above expectations. The unemployment rate fell and that shows that the economy is strong.”
“The market is treating good news as good news. Today’s news confirms that the economy is on solid footing. I would view today’s initial move in stocks with some caution as the dollar strengthens and bond yields are higher,” he says.
“All the data this week suggested the economy is strong. This is a final nail in the coffin for the Fed to cut just 25 basis points.”
“Another thing that should worry the market is that average hourly wages increased by 0.4% m/m, which was enough to take the year-on-year figure to 4%, the highest level in five months.”
KARL SCHAMOTTA, PRINCIPAL MARKET STRATEGIST, CORPAY, TORONTO
“Blockbuster payrolls report anyway. I think a no-landing scenario for the US economy has suddenly become much more plausible. This is a report that is beautiful both in broad terms and internally. You’re looking at a sustained increase in job creation over the last three months, a declining unemployment rate and a stable employment rate, all of which indicate that this is not a statistical anomaly that could be wiped out in the coming months. What this ultimately means is that Treasury yields are rising at the front of the curve, expectations for rate cuts are retreating, and the expectation now would be for the Federal Reserve to be much more cautious in easing policy.”
BRIAN JACOBSEN, CHIEF ECONOMIST, WEALTH MANAGEMENT ANNEX, MENOMONEE FALLS, WISCONSIN “A pleasant surprise on the upside, but mentally the Fed is hurting about 68,000 of the total payroll figure. This is because the Bureau of Labor Statistics has not yet revised its numbers against of its latest figures. Benchmark studies from August are also the most frequently revised payrolls, as there are all kinds of problems with people going back to school. This could be due to Hurricane Helene, which caused major damage during the survey week “Unless we see a big downside surprise in the November 1 report for October, the Fed will see this as a reason to cut only 25 basis points.” Friday’s jobs report was stronger That’s still the right decision by the Fed to cut rates another 50 basis points in September, which was essentially an insurance policy for the Fed to protect against any risk of labor market deterioration, which was slowing before Friday’s report.” “Labor market data could be clouded over the next few reports by a perfect storm of factors, such as the port strike and disruptions from Hurricane Helene. While this data isn’t likely to change the Fed’s interest rate stance, it could make it more difficult to do so. for both central bankers and investors to accurately measure how the labor market is doing.” “The stock market has lived up to October’s reputation for increased volatility, and we expect this turmoil to continue in the coming weeks as the market begins to navigate the uncertainty surrounding the election, the Federal Reserve’s next move and corporate earnings reports.” , HEAD OF MULTISECTOR INVESTING, GOLDMAN SACHSASSET MANAGEMENT (in email note) “Today’s data hit a grand slam with strong payroll numbers, positive revisions and declining unemployment. The economy is heading into the postseason on a strong note. This is in every respect a blow and the Fed should be smiling as they pull out their batons! This is positive for credit as the fundamentals of this economy are on strong footing.”
(Compiled by the Global Finance & Markets Breaking News team)
